Helical Bar Regulatory News (HLCL)

7 April 2022

Helical today provides a business and trading update for the period 1 October 2021 to 31 March 2022 ("the Period"). 

Commenting on the Company's activities, Gerald Kaye, Chief Executive, said:

"The acquisition of 100 New Bridge Street, London EC4 during the Period has substantially increased the Group's development pipeline. A planning application will be made shortly for a complete refurbishment of the building, including the replacement of the existing cladding and additional floor space to the existing 167,026 sq ft. Aligned with the approach taken across its portfolio, the Company will seek to provide a "best in class" building, maximising its ESG credentials and targeting BREEAM "Outstanding" and NABERS "5 Star" ratings on its planned delivery in early 2025.

"The Group has identified additional potential schemes which are at varying stages of assessment and discussion and would bolster its development pipeline. Meanwhile, good progress is being made at 33 Charterhouse Street, London EC1 which is on track for completion in September 2022.

"Leasing success at our investment assets continues to reconfirm the quality and appeal of our portfolio with high levels of rent collection throughout the past year and new lettings achieved at rents above March 2021 ERVs. This activity supports our steadfast conviction that London remains Europe's pre-eminent capital city for an increasingly diverse range of occupiers and that the importance of the office remains for businesses seeking a competitive edge over their peers.

"With effect from 1 April 2022, Helical has converted into a Real Estate Investment Trust ("REIT"), enhancing returns for Shareholders in future years."

Operational Performance

Acquisitions

On 1 March, Helical completed the acquisition of the Guernsey incorporated single asset company, FPM 100 New Bridge Street Limited, that owns 100 New Bridge Street, London EC4 for a gross cash consideration of approximately £160m. The 167,026 sq ft office building is currently let to international law firm Baker McKenzie, whose lease expires in December 2023. Helical proposes to carry out a major, sustainability led refurbishment to create a new best-in-class Grade A office building that puts occupier health and well-being at its centre and undertake significant public realm improvements around the site.

Lettings

In the Period, we have completed nine new lettings across the portfolio, totalling 35,799 sq ft, delivering contracted rent of £2.0m (Helical's share £1.8m) at 2.9% above the 31 March 2021 ERV (excluding managed lettings). Letting highlights include:

· The newly refurbished first floor and one of the two ground floor units at 25 Charterhouse Square, EC1 to Entain, the FTSE listed betting and gaming company, to establish a global innovation hub. Following the letting the building is 95% let.

· Three lettings at the Loom, E1, totalling 8,623 sq ft. The building is now 81% let with eight units available.

· Two further lettings, totalling 3,431 sq ft, at 55 Bartholomew, EC1 to law firm William Fry and Zero Gravity, an educational consultant.

· The vacant retail unit of 2,527 sq ft at The Warehouse has been let to a restaurant, Well Hung, that is expected to commence trading in April.

· Two lettings totalling 11,953 sq ft have been achieved at Trinity, Manchester. The first floor has been let to British Engineering and part of the sixth floor has been let to Waterman Group. The building is now 76% let.

Sales

At Barts Square, EC1, we have completed the sale of the last remaining apartment in Phase One. In Phase Two, we completed the sale of a further six apartments and one further apartment is reserved, leaving 14 apartments available for sale in this 236-unit residential scheme.

Developments

At 33 Charterhouse Street, EC1, our 205,369 sq ft office development, the external works have now been completed with all cladding installed and the tower cranes removed. The internal works are progressing, and practical completion remains on track for September 2022.

Rent collection

We have collected 93.4% of the March 2022 quarter rents demanded to date (82.8% at the corresponding date last year) and anticipate, through agreed payment plans, to have collected 99.0% by the end of June.

We have now collected 95.2% of all rent contracted and payable for the financial year to 31 March 2022. Of the balance, 3.3% remains to be collected, following the end of the Government's general moratorium, via payment plans with 1.5% having been agreed to be written off.

REIT status

The Company converted to a Real Estate Investment Trust ("REIT") on 1 April 2022 and will be exempt from UK Corporation Tax on the future profits of the property business which fall within the REIT regime. For the 2023 interim dividend, expected to be paid in December 2022, and all dividends thereafter, shareholders will receive a Property Income Distribution ("PID") from the profits of the REIT business, and a second distribution from the Company's non-REIT business.

Financing

At 31 March 2022, the Group had a £400m Revolving Credit Facility ("RCF"), fully drawn at an effective interest rate of c.2.9% with interest rate swaps at an average swap rate of 0.89% on 75% of the facility. The RCF has a repayment date of July 2025, with a one-year extension option on £300m and two one-year extension options on the remaining £100m. In addition, the Group has an undrawn £60m short term facility to December 2022.

In our joint ventures, we had drawn £40.9m of the £69.9m (our share) facility with Allianz to develop 33 Charterhouse Street, EC1.

During the Period:

· The Group drew down £100m under the terms of its £400m RCF and refinanced The Loom, E1, and the recent acquisition 100 New Bridge Street, EC4 into the RCF, drawing down a further £40m. This increased the drawn funds to the facility's maximum of £400m.

· The Group entered into a £60m 12-month facility, initially to provide additional liquidity to the Group and now available to finance new acquisitions.

· The £80.75m term loan facility with Aviva was repaid and cancelled at a cost of £4.57m, or 3.7p per share.

· The facility with HSBC at Barts Square, EC1 was fully repaid and cancelled.

The Group's weighted average cost of debt at 31 March 2022 was 3.2% (30 September 2021: 3.5%).

On 31 March 2022, the Group had c.£18m of cash and £99m of undrawn loan facilities.

Board changes

As noted in the Company's 2021 Annual Report, Richard Grant is standing down as Board Chairman, Nominations Committee Chairman and Director of the Company at the 2022 AGM.

Following an internal recruitment process, Helical announced on 11 February 2022 the appointment of Richard Cotton as independent Non-Executive Chairman Designate.

Subject to Shareholder approval of his re-election, it is intended that he will succeed Richard Grant as Chairman of the Board following the conclusion of the 2022 AGM in July. Richard Cotton will also become Chairman of the Nominations Committee and step down from the Audit and Risk Committee. It is also proposed that Richard Cotton will hand over his duties as Senior Independent Director to Sue Clayton with effect from the conclusion of the 2022 AGM. Sue has been an Independent Non-Executive Director on the Board of Helical since February 2016.

Notice of Results

The Group confirms that it will announce its full year results for the 12 months ended 31 March 2022 on Tuesday 24 May 2022. There will be a presentation for analysts at 8:30am on the morning of the results, for details of which please contact FTI Consulting.

For further information, please contact: